Cabela's 2013 Annual Report Download - page 54

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44
Operating income increased $86 million, or 31.1%, in 2013 compared to 2012, and operating income as a
percentage of revenue increased 110 basis points to 10.0% for 2013. The increase in total operating income was
primarily due to increases in revenue from all business segments as well as an increase in our merchandise gross
profit. This improvement was partially offset by higher consolidated operating expenses. Selling, distribution, and
administrative expenses increased in 2013 compared to 2012 primarily due to increases in comparable and new
store costs and related support areas.
Under an Intercompany Agreement, the Financial Services segment pays to the Retail and Direct business
segments a fixed license fee equal to 70 basis points on all originated charge volume of the Cabela’s CLUB Visa
credit card portfolio. In addition, among other items, the agreement requires the Financial Services segment
to reimburse the Retail and Direct segments for certain operating and promotional costs. Fees paid under the
Intercompany Agreement by the Financial Services segment to these two segments increased $18 million in 2013
compared to 2012; a $19 million increase to the Retail segment and a $1 million decrease to the Direct segment.
Interest (Expense) Income, Net
Interest expense, net of interest income, increased $2 million to $22 million in 2013 compared to $20 million
in 2012. Interest expense is accrued on our revolving credit facilities and long-term debt as well as on unrecognized
tax benefits.
Other Non-Operating Income, Net
Other non-operating income was $4 million in 2013 compared to $6 million in 2012. This income is primarily
from interest earned on our economic development bonds.
Provision for Income Taxes
Our effective tax rate was 34.7% in 2013 compared to 33.7% in 2012. The effective tax rates for both
years differed from our statutory rate primarily due to the mix of taxable income between the United States
and foreign tax jurisdictions. The balance of unrecognized tax benefits, which was classified with long-term
liabilities in the consolidated balance sheet, totaled $65 million at December 28, 2013, compared to $39 million at
December 29, 2012.
Results of Operations - 2012 Compared to 2011
Revenues
Comparisons and analysis of our revenues are presented below for the years ended:
2012 %2011 %Increase
(Decrease) % Change
(Dollars in Thousands)
Retail $ 1,849,582 59.4% $ 1,550,442 55.2% $ 299,140 19.3%
Direct 930,943 29.9 956,834 34.0 (25,891) (2.7)
Financial Services 319,399 10.3 291,746 10.4 27,653 9.5
Other 12,758 0.4 12,144 0.4 614 5.1
$ 3,112,682 100.0% $ 2,811,166 100.0% $ 301,516 10.7